In June 2001, ESI published a major report on Montenegro: Rhetoric and Reform. The report found that large amounts of international assistance had not led to essential institutional reform:

"Most of the institutional change during the past three years has been a steady expansion of the republican administration, as it absorbed more functions from Yugoslavia. … The cost of supporting the administration absorbs two-thirds of the Montenegrin budget, and is met only through massive and until now largely unconditional foreign assistance."

"There has been no shortage of strategy documents, project proposals, working groups and expert teams developing long lists of objectives. However, as so often in the former Yugoslavia, the rhetoric of change has become a substitute for the reality."

"In the field of judicial reform, not one new law has been adopted since the reform process was launched in 1998. In the field of administrative reform, no action has taken place. In the field of local government reform no substantial changes have taken place."

Carl Bildt handed the report to president Milo Djukanovic on the day of its publication. It was immediately translated and distributed to all ministries, triggering a vigorous debate in Podgorica. A few months later, the Montenegrin Foreign Ministry sent ESI a long letter outlining what reforms were now underway.